After the company’s weaker than expected outlook, and increased investments, shares of Atlassian Corporation fell more than 6% on Friday pre-open.

The TEAM non-IFRS EPS was 47c, compared with 48c the previous quarter. Analyst expectations were 32c per share. In revenue, $740.5 million was recorded, an increase in 30% YoY. It beat consensus estimates of $701.3 millions.

Subscription revenue increased 59% YoY to $555.1 Million, which is more than the anticipated $529.3million. Atlassian served 234,575 customers over the course of the period. That’s 10% more than expected and less than 247.384. Analysts expected 17.2%. However, the operating margin for non-IFRS was 24%.

Atlassian is expecting non-IFRS EPS to be around 24c for Q4. This falls short of the consensus analyst estimate of 30c. According to the company’s expectations, revenue will be between $710 and $725 millions. That is more than $689.4million. Non-IFRS operating profit margin is estimated to be 15% in comparison to 15.6%.

“We now have line of sight to $10 billion in annual revenue based on our current markets and products,” said co-founder and co-CEO Mike Cannon-Brookes.

Rajeev Rajan was appointed Chief Technology Officer.

 Morgan Stanley analyst Keith Weiss lowered the price target to $460.00 per share from $505.00 but remains Overweight on strong business fundamentals.

“For investors with a longer-term time horizon, highly attractive cloud transition, solid unit economics, strong market positioning and pragmatic investments for growth will continue to make Atlassian one of the most durable 30% growth stories in software, setting the stage for durable 25%+ FCF growth thru CY26 at a $2.8+ billion scale – an attractive combination with shares trading at ~35x our post-transition CY25 FCF,” Weiss said in a note.

Mizuho analyst Gregg Moskowitz said TEAM delivered a “strong all-around quarter.”

“We are surprised by the 6% AH sell-off, and find it unjustified. We remain positive in our conviction that TEAM will reap the benefits of its strategic actions, which should lead to much greater cloud adoption and overall monetization for FY22 and beyond. We reiterate our Buy rating and $500 PT,” the analyst wrote.

By Senad Karaahmetovic